I really like the discussions that are occurring with regard to the difference between standard business ROI and measuring the ROI of social media engagement, particularly in terms of philanthropic and nonprofit organisations. This guest blog article written by Claire Diaz Oritz (nee Williams) and posted on Beth’s Blog gives a great insight into how nonprofits and NGOs need to think about social media and I think she is on the money with her model: Return on Investment = Reach, Outcome, Influence.

Although I opened the discussion, I didn’t take it far enough, and too many of you came away with the same, burning question: How can we measure the ROI of relationships?

Measuring the ROI of a marketing campaign can be time-consuming, but it’s always straightforward. Measuring the ROI of a fundraising campaign is equally simple. We spent $1,200 to send out 500 pieces of mail in our direct mail campaign and we netted $4,500 in donations. Done. We spent $50,000 to host our annual fundraiser and we received $200,000 in donations. Understood.

But relationships? How can you possibly measure the intangible?

What was the value of my first meeting with the lovely Beth Kanter a few years ago at the old Twitter offices, where we chatted for far too long about the highs and lows of adoption (and, a little bit about nonprofits and social media)?

Who knows. But I’ve written some guest posts, so I guess she doesn’t hate me.

What is the value of the strong connection I’ve built with Amanda Rose (http://www.twitter.com/amanda) from Twestival (almost exclusively virtual save the frantic annual “we’re in the same place let’s have lunch!” phone call) over the years?

Got me. As far as I know she’s never made a donation to the non-profit I started (http://www.hoperuns.org), but I’m sure she’s told some folks about it.

When trying to promote our cause to the world, we yearn for relationships. And to some extent, we all have relationships like this, relationships that we are cultivating or have cultivated or hope to cultivate. We know we need them, we know we should spend time with them, but we’re not entirely clear on how much, or why, especially when it comes to fundraising.

Or are we?

I’m going to go out on a limb and say that we can quantify these relationships (to some extent). Yes, we can break down the real ROI of fundraising on social media.And here’s how.If you know me, you know I’m fan of uber simple acronyms and word games that help people remember and implement what I’m teaching. Heck I did create the pathetically obvious T.W.E.E.T model (Target, Write, Engage, Excel, Track) (http://clairediazortiz.com/how-to-use-twitter/) for excelling on Twitter, didn’t I?

And now I’m going to do it again.

How to Measure the ROI of Fundraising on Social Media:

Fundraising on social media is about relationships, and we can measure the ROI of those relationships by breaking down the return on investment into three parts.

Return on Investment = Reach, Outcome, Influence

Reach: A relationship you develop becomes more important the larger the reach is. If Susie P has 9 friends on Facebook, and Susie Q has 900, Susie P is probably your better bet. But remember, reach isn’t always about numbers. See Influence to better understand.

Outcome: Any relationship that yields tangible benefits is working. Did a three-hour dinner in London with an international aid worker bring you one quality application (the aid worker’s Facebook friend, no less) for an outstanding position at your non-profit you’ve been trying to fill? Did you have a blast at the dinner to boot? Even better.

Influence: Is a person popular, or do they actually have sway in your given area of interest? In one example I share in Twitter for Good, Scott Stratten’s @unmarketing (http://twitter.com/unmarketing) Twitter following (then about 40K) clicked more times on the bit.ly link he sent out of him singing than Ashton Kutcher’s million followers did. Why? Perhaps Ashton’s followers are more interested in watching Ashton sing. Likewise, if @ClaireD (http://twitter.com/claired) were to tweet about sports, no one would bat an eyelash. Targeted reach is what you’re after.

Specific case studies back up these three points. Born2Fly (http://born2fly.org/) is an organization dedicated to banishing sex trafficking, and Diana Scimone of Born2Fly’s excellent guest post (http://www.bethkanter.org/twitterthon/) here on Beth’s blog (which was reproduced in Twitter for Good (http://ht.ly/4RirJ) tells the story of learning from a fundraising campaign that didn’t meet expectations. Her take-away? Build relationships with bloggers to better promote the next fundraiser. REACH.

Fireside International (http://www.firesidepictures.com/wordpress/), a non-profit media company in Haiti, needed English language learning materials for a new school they were building. They reach out to Rosetta Stone, and scored $18,000 worth of materials. Query a hundred individuals or companies, and one hit may just come through. OUTCOME.

Global Citizen Year (http://www.globalcitizenyear.org), another organization featured in my book, is another. The key support they received from Nick Kristof convinced them of the power of Twitter to build relationships in order to garner support. INFLUENCE.

Measuring these specific points will bring you an ROI with all the shiny numbers you’ve been hoping for.

Ultimately, the success of fundraising on social media highlights what we have always known: to fundraise effectively (in the virtual or the brick-and-mortar world), you need relationships. Be smart about building them, cultivating them, and maximizing them.